You may be so dependent on a supplier or customer that damage to their operations may cause an interruption in your business operations and cause a loss of income to your business. For example, a manufacturer may use a material that is only available from one supplier. If the supplier’s factory is destroyed, the manufacturer cannot continue to make its products leaving you with no product to manufacture or sell. The unendorsed business income coverage form does not cover this loss exposure because the loss of business income must result from direct damage to your property. However there are endorsements available to provide coverage. These dependent properties endorsements cover loss of income at the insureds location resulting from direct damage to property at other locations.
There are four types of dependent properties:
1) Contributing locations
2) Recipient locations
3) Manufacturing locations
4) Leader locations
A contributing location is one provides materials or services to you. A recipient location is one that purchases materials from you. A manufacturing location is one that manufactures products for delivery to you or your customers. A leader location is one that attracts customers to your location such as a major department store to shopping center.
This can be a very important coverage that many consumers miss in their property insurance. For more information contact Insurance Incorporated.